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Coffee exporters must unite
Coffee exporters must unite to establish firms that are strong enough to compete against foreign rivals, said industry insiders.
Former chairman of the Viet Nam Coffee and Cacao Association (Vicofa) Doan Trieu Nhan admitted that domestic coffee exporters were facing major challenges due to the cost of taking out business loans compared to their foreign counterparts.
Domestic exporters recently called on the Government to provide support in the form of preferential loans.
Luong Van Tu, Chairman of the association, said that coffee prices had surged sharply in recent months to a record VND50,000 per kilo, creating fierce competition among buyers. Domestic exporters complained that they could not compete with foreign rivals in buying up coffee bean stocks.
Vicofa recently asked the authorities in coffee growing provinces to clamp down on foreign businesses setting up illegal buying networks. It said that the Government's policies only allowed foreign companies to invest in coffee growing, processing, and preserving for export – and the transfer of advanced technology. They were not permitted to use their networks to buy coffee.
However, industry insiders admitted that the ban was only a temporary measure as the country would sooner or later have to open the coffee market for foreign wholesalers in accordance with World Trade Organisation commitments.
"The Government's support is just a sticking-plaster measure. For a long-term solution, domestic coffee exporters must unite to set up large-sized firms capable of competing against foreign rivals," said Nhan.
Vicofa Chairman Luong Van Tu also admitted that the coffee industry was short of an association that was strong enough to link domestic coffee exporters through comprehensive and practical strategies.
"We can learn from Brazil, Colombia, India and Indonesia which have hundreds of years of experience in the coffee industry," said Tu.
Nguyen Dinh Bich, a market analyst from the Trade Research Institute, said that the Government should encourage domestic and foreign investment in the coffee processing industry to benefit both farmers and exporters.
Investing in processing technologies to transform Viet Nam from a country relying on raw coffee into an exporter providing processed products was indispensable for the industry to sustainably develop, Bich said.
"Only by through this can exporters make higher profits, with farmers being able to avoid being forced into selling coffee bean at low prices," Bich said.
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